Verizon Won't Follow In AT&T's Media-Focused Footsteps

Verizon Logo AH

While Verizon is the largest wireless carrier in the United States, the New Jersey-based company shouldn’t rest on its laurels seeing how the telecommunications and media landscape in the United States is about to change in a radical manner. With AT&T’s acquisition of DIRECTV which went through in 2015 and the company’s recent attempt to acquire Time Warner, it’s quite obvious that at least some telecom giants in the country are now looking into vertical mergers with media companies as a way to diversify and grow their revenue streams. Some, but not Verizon. Namely, the wireless carrier’s top executives met with several industry analysts earlier this week and explicitly stated how they have no intention of mimicking AT&T’s aggressive strategy which entails spending vast amounts of money on acquiring providers of media content. This comment specifically referred to recent rumors that the carrier is interested in acquiring CBS.

In fact, Lowell McAdam, Verizon’s Chairman and Chief Executive Officer, reportedly asserted that management is incredibly pleased with how AOL has been progressing, adding that the company’s 2015 acquisition managed to increase its revenue by 10% in the third quarter of the year. In other words, Verizon is opting for a more patient approach to growing its business, which is a sound strategy when you’re a telecom giant with the largest market share in the country. Of course, that isn’t to say investors are terribly pleased with this decision when their competitor is actively trying to buy a shiny new toy called Time Warner for $86 billion. This could explain why Verizon’s stocks took a small hit today and have declined approximately 0.4% in the last 24 hours. Finally, the said meeting with analysts provided no updates on Verizon’s acquisition of Yahoo which was recently put on hold following the revelation that Yahoo suffered a massive security breach which compromised 500 million users back in 2014.

So, while Verizon is still trying to diversify and grow its revenue stream, the company is taking a radically different approach to that of its largest competitor. By most accounts, Verizon is mostly looking to invest in 5G infrastructure and technologies in order to be ready for the upcoming transition to the fifth generation of mobile networks and isn’t willing to spend a lot of cash on acquisitions which don’t directly help that endeavor. While AT&T is betting on content creation, Verizon is putting its growth-related hopes in content distribution, as evidenced by its recent purchases of XO Communications and Vessel. Which one of these strategies will prove to be more lucrative? Only time will tell.